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Reliance Industries (RIL) indicated that the commercial launch of its telecom services (Reliance Jio Infocomm) would take place by Dec 2015, with a soft launch in the near term. Reliance Jio plans network coverage of 80% of the population by the end of 2015, with full population coverage within 3 years. We view this as ambitious as no private telco currently offers 100% population coverage. Capacity at launch of 100mn wireless subs and 20mn FTTH subs. At present, there are fewer than 100mn 3G subs in India. LTE smartphone prices to drop below US$65 by Dec 2015 vs current price of US$100.

Jio Plans to roll out a suite of products like on-demand TV, music streaming, magazines/ news and digital
money/payments. These are in addition to Jio Chat, which was rolled out earlier this year. Jio plans to bundle these between Rs300-Rs500 per month. Mukesh Ambani did not offer much colour on their strategy towards a voice solution. We believe visibility on Jio’s integrated (voice + data) service offerings would improve on release of spectrum sharing Read the rest of this entry »

We have spoken to several constituencies in the Indian mobile ecosystem (mobile operators, handset suppliers, equipment vendors, management consultants, technical experts) and believe that Reliance Jio Infocomm is gearing up for a big launch in H2 2015. We believe RJio’s entry is likely to be a key driver of affordable data pricing and 4G handsets, which will trigger mass data adoption in India.

We believe the handset ecosystem of 4G is still evolving. Therefore, 4G handsets are likely to be significantly more expensive than 3G handsets over the next 2-3 years, likely limiting RJio’s mass market appeal. While RJio has the
option of subsidizing handsets, we believe this would not make sense, as credit enforcement is difficult in India. In addition to this, Reliance Jio will have a herculean task to stabilize its 4G-LTE High Speed mobile Data Network.

Reliance Jio is also likely to face challenges in providing regular voice on a mass market handset, as VoLTE development is still at a nascent stage. VoLTE handsets are likely to be even more expensive, further limiting the mass market appeal. The mass market’s mobile internet needs can be served more efficiently through an HSPA 3G network (especially on 900MHz) Read the rest of this entry »

LinkedIn currently has over 30m user profiles in India. This compares to 31m unique users Info Edge had at 2014 end. Initially, the company, market and we, did view LinkedIn as a significant threat to Naukri’s dominance on online recruitment. However, even till now, when LinkedIn in India has approximately the same user base as Naukri, we have not seen any material impact on Naukri’s operating or financial metrics. We believe this is due to two factors:

LinkedIn address a different set of jobs and job seekers. Naukri’s bread and butter business is entry to mid-level jobs, where volume trumps value. In contrast, LinkedIn is more suited for relatively higher level positions, where volumes are lesser, but value (to company and consequently LinkedIn) is higher. And, the nature of India’s economy and job market is such that Naukri addresses a much larger part of the recruitment market.

LinkedIn has been able to garner a larger user-base very quickly. However, it is building the recruiter side that’s more challenging and takes time and manpower. LinkedIn probably Read the rest of this entry »

Facebook family has expanded to feature five core apps: WhatsApp, Groups, Messenger, Instagram, and of course the core Facebook app.

Facebook has been busy building out the functionality within its Messenger app (e.g., photo & video attachments, stickers, P2P payments, VoIP calling, etc.) and today it announced Messenger Platform, which is a broad based effort to enable third-party developers to build apps ad other experiences on top of the Messenger app. Third-party apps, that add new functionality and allow users to further personalize their Messenger messages, can now deeply integrate with Messenger.

Facebook for Messenger As part of the Messenger Platform announcement, the company also announced the launch of Messenger for Business, which adds functionality for Facebook users to interact with businesses and for businesses to utilize the Messenger app to communicate with customers. For instance, an online retailer could send receipts, shipping time & information, and handle customer service questions. Payment transactions may also be supported. Zulily was highlighted as a launch partner.

Expanding the Messenger app to feature third-party developer support is perhaps the largest new product announcement of the day. While Messenger as a Platform is an important concept, given the size, the initial use-cases highlighted by the company are not particularly compelling on their own. The focus of the Messenger Platform will be to more easily allow distribution, discover, and attribution of the 3rd Party developers’ apps from within the Messenger app. As for the features Read the rest of this entry »

~75% of total gross revenue, and ~75%% of search revenue for Google is still derived from desktop in what appears to be an increasingly mobile app world as Google arguably remains the most important company in the (digital) media and tech industries.

As Per data from RKG, desktop’s share of clicks has declined by 19% since 4Q12, while the share of spend has only declined by 14%. This widening delta between desktop’s share of spend and share of clicks implies that in recent years improving desktop CPCs have been an important driver of growth in search spend. This is clearly evident given that desktop click growth has been basically flat in the U.S. in 2013 and 2014 while Google’s desktop search revenue has continued to grow. We believe this is due in large part to a higher percentage of desktop clicks coming from PLAs, which monetize at higher rates than standard text ads. Accordingly, assuming overall desktop clicks do not re-accelerate, desktop CPCs will need to continue to grow at rates similar to those seen recently, fueled by continued mix impact from PLAs. However, without PLAs desktop search revenue growth is likely to Read the rest of this entry »

Our positive view on the outlook for e-Commerce growth globally is driven by the theme of expanding online access. Internet penetration for a number of developed markets has now reached more than 80% while a number of European countries now have internet penetration rates of as high as 95%.

At the same time and supportive of the growth outlook for e-Commerce, in our view, is the fact that internet access across the developing world is rapidly increasing. For example, our Emerging Consumer Survey showed that increasing internet penetration among all of the countries surveyed, with greatest momentum in those countries with the lowest rate of internet access. For example, our recent Emerging Consumer Survey showed increasing internet penetration amongst all of the countries surveyed, with the greatest momentum in those countries with the lowest rate of internet access (India and Indonesia).

Mobile internet access is driving the theme
Whereas internet access initially and especially in the developed world was Read the rest of this entry »

Recent TRAI’s performance indicator report suggest that roaming revenue contributes to only 5.5% of total subscription revenue and hence lowering the roaming tariff could have limited impact as increase in volume would compensate for decrease in tariff. However lower roaming tariff on local call / sms (i.e. 65p/min) could cap the local tariffs in home circle as a local call (or a sms send) made from a sim acquired from another circle would become cheaper than that of a home circle sim (home circle tariff is technically under forbearance). Currently local calls contribute to 80% of the total outgoing MoU i.e. ~155min per sub per month.

TRAI has proposed reducing ceiling for: 1) Local outgoing calls while national roaming – Rs0.65/min (Rs1/min); 2) Long distance outgoing while national roaming – Rs1 (Rs1.5); and 3) Incoming call while roaming – Rs0.45 (Rs0.8/min). The last review was done in 2013. This proposal is aimed at the NTP 2012’s intention of “One Nation – Free Roaming.” TRAI has, however, rejected possibility of eliminating roaming charges completely. Local tariffs remain under forbearance (not controlled by TRAI).